##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB

(Mark One)

XBOX         Annual report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended August
31, 2001.

BOX         Transition report under section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from_______to_______.

Commission file number 0-18808

1st Realty Investments, Inc.
(Name of small business issuer as specified in its charter)

|                                                                      |  |                                             
|--------------------------------------------------------------------- |  | --------------------------------------------
|Nevada
(State or other jurisdiction
of incorporation or organization) |  | 13-3530765
(IRS Employer Identification No.)

|                                                                                                       |  |                 
|------------------------------------------------------------------------------------------------------ |  | ----------------
|5115 N. Scottsdale Road, Suite 101, Scottsdale, AZ
           (Address of principal executive offices) |  | 85250
(Zip Code)

Registrants telephone number: (480) 949-6007

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act:

Common Stock, Par Value $0.001
(Title of Class)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes BOX         No XBOX

Indicate by check mark if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB. BOX

The registrants revenues for the fiscal year ended August 31, 2001, were
$18,898.

There is currently no active trading market for the Registrants common stock.
There have been no trades of the Registrants common stock within the last 60
days. The aggregate value of the voting stock held by non-affiliates of the
registrant as of May 10, 2002 based on the par value of $0.001 per share was
$14,317.

The number of shares of the Registrants
Common Stock outstanding at June 15,
2002 was 17,518,525.

DOCUMENTS INCORPORATED BY REFERENCE
None.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT:
Yes BOX      NoXBOX





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TABLE OF CONTENTS



|                          |                                                                                                                         |  |  |  |  |  |  | 
|------------------------- | ----------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                   
|                          | Item 1. Business                                                                                                       
|                          | Item 2. Description of Property.                                                                                       
|                          | Item 3. Legal Proceedings                                                                                              
|                          | Item 4. Submission of Matters to a Vote of Security Holders.                                                           
|PART II                  
|                          | Item 5. Market for Common Equity and Related Stockholder Matters                                                       
|                          | Item 6. Managements Discussion and Analysis or Plan of Operation                                                      
|                          | Item 7. Financial Statements                                                                                           
|                          | Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                           
|PART III                 
|                          | Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act
|                          | Item 10. Executive Compensation                                                                                        
|                          | Item 11. Security Ownership of Certain Beneficial Owners and Management                                                
|                          | Item 12. Certain Relationships and Related Transactions                                                                
|                          | Item 13. Exhibits and Reports on Form 8-K.                                                                             
|SIGNATURES               
|CONTENTS                 
|                          | REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                                                                     
|                          | CONSOLIDATED BALANCE SHEET                                                                                             
|                          | CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                  
|                          | CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)                                                              
|                          | CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                  
|                          | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                                             
|2001 10-KSB EXHIBIT INDEX
|EX-10.1                  
|EX-10.2                  
|EX-10.3                  
|EX-10.4                  
|EX-10.5                  
|EX-10.6                  
|EX-10.7                  
|EX-10.8                  
|EX-10.9                  
|EX-10.10                 
|EX-10.11                 
|EX-21                    
|EX-99.1                  



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PART I




Item 1.      Business

History

1st Realty Investments, Inc. (formerly First National Realty Associates,
Inc.) (the Company) is incorporated in the state of Nevada, We are an
Arizona-based company that was formed in Georgia in October 1988, and became a
publicly-held Nevada company through a merger into Emphatic Mergers, Inc. a
publicly-held corporation on April 11, 1990. We changed our name from First
National Realty Associates, Inc. to 1st Realty Investments, Inc. on July 13,
2000.

We were founded with the intended purpose of becoming primarily a national
residential real estate brokerage company, focusing on relatively affluent
markets in geographically diverse market areas. Between 1988 and 1991, we grew
primarily through the acquisition of other real estate brokerage companies in
multiple states. However, principally due to the downturn in the real estate
industry in the early 1990s, we were unable to generate profitable operations.
On April 6, 1992, we filed a voluntary petition in the United States Bankruptcy
Court for the District of Georgia to reorganize under Chapter 11 of the United
States Bankruptcy Code (the Bankruptcy Code). On January 21, 1993, we
voluntarily converted our petition to a case under Chapter 7 of the Bankruptcy
Code. All of our assets were subsequently liquidated and the proceeds
distributed, and the bankruptcy was dismissed on September 27, 1994. From that
date through the end of fiscal 2000, we had no operations. We did, however,
incur approximately $51,000 in administrative and legal expenses during that
time. We paid for these costs either by issuing common stock or through
advances we received from Great Western Land and Recreation, Inc. (Great
Western), formerly Amortibanc Management L.C.

On September 22, 2000, we purchased a $20,000 note receivable, issued by
an unrelated company in connection with a sale of real estate, bearing interest
at 9%. This note receivable was purchased from Great Western in exchange for
500,000 shares of our common stock. On December 29, 2000, we purchased
ownership interests in nine entities from Great Western in exchange for a
$951,629 note payable and 1,000,000 shares of our common stock. The most
significant of these interests were a 25.52% ownership in Laguna at Arrowhead
Apartments L.L.C., (Laguna) which owns an apartment complex in Phoenix,
Arizona, and a 51% interest in Firebird Financial L.L.C, (Firebird Financial)
an entity that was formed to provide second mortgage financing in the Houston,
Texas area. Firebird Financial has not funded any new loans since 1998, and
does not have any current plans to fund additional loans in the future.

Great Western is a related company that owns 14.3% of our common stock as
of May 31, 2002.

We filed our last annual report on Form 10-K for the year ended August 31,
1991, and our last quarterly report on Form 10-Q for the quarter ended November
30, 1991, on or about December 13, 1991 and January 21, 1992, respectively. We
have not filed annual reports for the years ended August 31, 1992 through 2000,
or quarterly reports for the quarters ended February 28, 1992 through May 31,
2000. Quarterly reports for the quarters ended November 30, 2000 through
February 28, 2002 are being filed concurrently with this annual report on Form
10-KSB. Due to changes in personnel and the lack of availability of records
kept by such personnel prior to 2000, we have determined that certain of our
records for the fiscal years 1992 through 2000 are not available and therefore
not able to be audited and the cost of recreating and auditing such records, if
such recreation were possible, would not be justified in light of the age of
the information and its relevancy to our current operations. Therefore, we do
not intend to prepare or file annual or quarterly reports for the periods set
forth above through the year ended August 31, 2000.

Business Plan

Our
business plan is to use our limited resources to search for,
investigate and acquire or participate in a business opportunity.

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Regulation

The financing activities of Firebird Financial are subject to extensive
regulation, including regulation under the Truth-in-Lending Act, Regulation Z
(the Fair Housing Act), the Fair Debt Collection Practices Act, the Equal
Credit Opportunity Act, Regulation B (the Electronic Funds Transfer Act),
Regulation E (the Home Mortgage Disclosure Act), Regulation C (Unfair or
Deceptive Acts or Practices), Regulation AA and the Right to Financial Privacy
Act. In addition, Laguna must comply with various federal, state and local
environmental, zoning and other statutes and regulations.

We believe that we are in compliance in all material respects with
applicable regulations. However, these regulations are subject to change and we
cannot assess the cost of complying with all of the applicable laws and
regulations. Our failure to comply with applicable laws or regulations could
subject us to large fines or other costly activities to come into compliance.

Competition

The financing activities of Firebird Financial compete with banks,
mortgage companies, other financial institutions and government agencies
offering financing of real estate. However, Firebird Financial has not funded
any new loans since 1998, and does not have any current plans to fund
additional loans in the future.

Facilities

Our office is located at the office of Great Western, at 5115 N.
Scottsdale Road, Suite 101, Scottsdale, Arizona 85250. We are using this space
free of charge.

Employees

We have no employees. Our business and affairs are handled by directors
who provide services on an as needed basis. We may engage consultants,
attorneys, and accountants on a limited basis, and do not anticipate a need to
engage any full-time employees until we identify and consummate a transaction with a business
opportunity.




Item 2.      Description of Property.

We do not own any property and conduct our limited operations from the
office of Great Western. (See Item 1. Description of Business: Facilities.)




Item 3.      Legal Proceedings

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We are not a party to any pending legal proceedings and, to the best of
our knowledge, no litigation by or against us has been threatened other than as
discussed below.

Great Western entered into a merger agreement with quepasa.com as of
August 6, 2001. In October 2001, in order to induce Great Western to amend and
extend the original merger agreement, quepasa.com loaned Great Western
$500,000. This loan was secured by 1st Realtys investment in Laguna. In
February 2002, the merger agreement was terminated. The merger agreement
provided for a termination fee of $500,000 as liquidated damages under certain
circumstances. Great Western believes that it is entitled to this termination
fee, which would result in the loan being deemed paid in full, and has filed a
declaratory judgment action against quepasa.com on that issue. quepasa.com has
filed a counterclaim, alleging that it is entitled to the termination fee and
seeking to foreclose on the loan. quepasa.com has named 1st Realty as a
third-party defendant to its counterclaim because 1st Realtys investment in
Laguna was pledged as collateral for the loan. Management does not believe
that the ultimate resolution of this matter will have a material adverse effect
on 1st Realtys financial condition, results of operations or cash flows.




Item 4.      Submission of Matters to a Vote of Security Holders.

None.

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PART II




Item 5.      Market for Common Equity and Related Stockholder Matters

There is currently no active trading market for our common stock, and
there can be no assurance that an active or liquid trading market for our
common stock will develop in the future.

We
act as our own transfer agent. According to our records, at
June 15,
2002, there were 7,593 holders of record of our common stock, including
broker-dealers and clearing firms holding shares on behalf of their clients.

No dividends have ever been paid on our common stock, and we do not
anticipate paying dividends in the foreseeable future.




Item 6.      Managements Discussion and Analysis or Plan of Operation

Forward-Looking Statements

This Annual Report to Stockholders includes forward-looking statements
as that term is defined in Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements are often characterized by the use of words such as
may, believes, plans, will, anticipates, estimates, expects, or
intends or by discussions of strategy, plans or intentions. All
forward-looking statements in this Annual Report to Stockholders are made based
on our current expectations and estimates, which involve risks, uncertainties
and other factors that could cause results to differ materially from those
expressed in forward-looking statements. You are cautioned not to place undue
reliance on any such forward-looking statements. We have no obligation to
publicly release the result of any revisions that may be made to any
forward-looking statements to reflect anticipated or unanticipated events or
circumstances occurring after the date of such statements. Forward-looking
statements involve a number of risks and uncertainties including, but not
limited to, general economic conditions, our ability to find a suitable company
to effect a business combination, competitive factors and other risk factors as
set forth in Exhibit 99.1 of this Annual Report to Stockholders and in our
other filings with the Securities and Exchange Commission.

Overview

On April 6, 1992, we filed a voluntary petition in the United States
Bankruptcy Court for the District of Georgia to reorganize under Chapter 11 of
the United States Bankruptcy Code. On January 21, 1993, we voluntarily
converted our petition to a case under Chapter 7 of the Bankruptcy Code. All
of our assets were subsequently liquidated and the proceeds distributed, and
the bankruptcy was dismissed on September 27, 1994. From that date through the
end of fiscal 2000, we had no operations. We did, however, incur approximately
$51,000 in administrative and legal expenses during that time. We paid for
these costs either by issuing common stock or through advances we received from
Great Western.

On September 29, 2000, we purchased a $20,000 note receivable issued by an
unrelated company in connection with a sale of real estate, bearing interest at
9%. This note receivable was purchased from Great Western in exchange for
500,000 shares of common stock. On December 29, 2000, we purchased ownership
interests in nine entities from Great Western in exchange for a $951,629 note
payable and 1,000,000 shares of common stock. The most significant of these
interest were a 25.52% ownership in Laguna, which owns an apartment complex in
Phoenix, Arizona, and a 51% interest in Firebird Financial, an entity that was
formed to provide second mortgage financing in the Houston, Texas area.
Firebird Financial has not funded any new loans since 1998, and does not have
any current plans to fund additional loans in the future.

Great Western is a related company that owns 14.3% of our common stock as
of June 15, 2002.

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Our
business plan is to use our limited resources to search for,
investigate and acquire or participate in a business opportunity.

Results of Operations

Year ended August 31, 2001 compared to year ended August 31, 2000

Interest income.Interest income was $18,898 in 2001 compared to zero in
2000. Interest income is related to the second mortgage notes receivable
carried by Firebird Financial and to a $20,000 note receivable we purchased
from Great Western. Firebird Financial was acquired in December 2000 and the
note receivable was purchased in September 2000.

General and administrative expense.General and administrative expense
increased $121,843 to $126,848 in 2001 from $5,005 in 2000. General and
administrative expense in 2001 consisted of $110,301 in charge-offs of
uncollectible notes receivable carried by Firebird Financial and $16,547 of
management, legal and accounting fees, primarily related to Firebird Financial.
General and administrative expense in 2000 consisted of legal and other
expenses.

Interest Expense. Interest expense was $51,684 in 2001 compared to zero
in 2000. The interest expense is related to the advances we received from
Great Western. In January 2001, interest at 8% per annum began to accrue on
these advances.

Equity in losses of unconsolidated company.Equity in losses of
unconsolidated company (Laguna) was $83,445 in 2001 compared to zero in 2000.
Laguna was purchased in December 2000.

Liquidity and Capital Resources

Cash used in operating activities was $77,829 in 2001 compared to $685 in
2000. Cash used in operations in 2001 consisted of our net loss of $243,079,
an increase in other assets of $1,587 and a decrease in accounts payable and
other accrued liabilities of $17,452 offset by net non-cash expenses of
$184,289. Net non-cash expenses
consisted of $110,301 in bad debt expense, $83,445 in undistributed losses
related to our equity investment in Laguna and $1,624 in depreciation and
amortization expense offset by $11,081 of accretion of interest income.

Cash
provided by investing activities was $96,651 in 2001 compared to $-0-
in 2000. Cash provided by investing activities in 2001 consisted of a
distribution of capital from Laguna of $31,900, cash acquired through
purchase of investments in businesses of $18,632 and collections of
notes receivable of $46,119. Our investments in businesses were
financed by a $951,629 advance from Great Western and by the issuance to Great
Western of 1,000,000 shares of common stock.

Cash
used in financing activities was $13,023 in 2001 compared to cash
provided of $685 in 2000. Cash used in financing activities in 2001
consisted of a net decrease in advances from related parties.

Our cash balance at August 31, 2001 was $5,799. Our limited cash
requirements have been funded primarily by advances from Great
Western. We cannot presently foresee the cash requirements of any
business opportunities that we may ultimately acquire. However, since
it is likely that any business we acquire will be involved in active
business operations, we anticipate that an acquisition will result
in increased cash requirements as well as increases in the number of
employees.

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Recent Accounting Pronouncements

In October 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144 Accounting for the Impairment or
Disposal of Long-Lived Assets: (SFAS 144). SFAS 144 requires that all
long-lived assets (including discontinued operations) that are to be disposed
of by sale be measured at the lower of book value or fair value less cost to
sell. Additionally, SFAS 144 expands the scope of discontinued operations to
include all components of an entity with operations that can be distinguished
from the rest of the entity and will be eliminated from the ongoing operations
of the entity in a disposal transaction. SFAS 144 is effective for us as of
January 1, 2002. We do not expect the implementation of SFAS 144 to have a
material effect on our financial condition or results of operations.




Item 7.      Financial Statements

The consolidated financial statements of the Company listed in the index
appearing under Item 13(a)(1) hereof are filed as part of this Annual Report on
Form 10-KSB and are hereby incorporated by reference in this Item 7. See also
Index to Consolidated Financial Statements on page F-1 hereof.




Item 8.      Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

Prior to August 31, 1991 our financial statements were audited by Deloitte
& Touche. From our fiscal year ended August 31, 1991 through our fiscal year
ended August 31, 2000 we did not have operations and did not have the funds to
pay to have our financial statements audited. In February 2002, we engaged
Grant Thornton LLP to audit our financial statements for the year ended August
31, 2001.

Our audit opinion for the year ended August 31, 1991 contained an
unqualified opinion. Our decision to retain Grant Thornton, LLP was approved
by our board of directors. We had no disagreements with Deloitte & Touche on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.

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PART III




Item 9.      Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act

Directors and Executive Officers

The following table sets forth information regarding our current executive
officers and directors:

|                                             |  |     |          |        |  |                                                |  |            |                | 
|-------------------------------------------- |  | --- | -------- | ------ |  | ---------------------------------------------- |  | ---------- | -------------- | 
|                                             |  |     |          |        |  |                                                |  | Officer or
|Name                                         |  | Age |          | Office |  | Director Since                                
|                                             |  |     |          |        |  |                                               
|Jay N. Torok
William Szilagyi
Roger B. Clark |  |     | 62
56
67 |        |  | ChairmanPresident and Board memberBoard member |  |            | 1994
1988
1989 | 

Our board of directors currently consists of three members. All directors
hold office until the next Annual Stockholders Meeting or until their death,
resignation, retirement, removal, disqualification, or until their successors
have been elected and qualified. Vacancies in the existing board are filed by
majority vote of the remaining directors. A summary of the background and
experience of each of these individuals follows

Jay
N. Torok served as Chairman of our board of directors, President and
Chief Executive Officer from our inception in 1988 until early 1992.
He again agreed to serve as our Chairman in 1994, and has held that
position since that date. During these periods, Mr. Torok served
in various positions with our subsidiary companies, including First
National Realty Associates of Georgia, Inc. and Hamer Holding Group,
Inc. In mid-1992, together with these subsidiaries, we filed voluntary
petitions to reorganize under Chapter 11
of the Bankruptcy Code. All petitions were voluntarily converted to Chapter 7
liquidations and the companies assets were liquidated and distributed in 1994.
Mr. Torok currently serves as the President and Chief Executive Officer of
Amortibanc Management, L.C. since 1993 and as Chairman of the Board, President
and Chief Executive Officer of Great Western since its inception. In addition
Mr. Torok has served as Executive Vice President of Amortibanc, Inc. and
President of Amortibanc Land and Cattle, L.L.C., Southwest Land and Cattle,
L.L.C. and Firebird Financial, L.L.C., as well as other Amortibanc affiliates
engaged in real estate development or venture capital. Prior to joining the
Amortibanc group of companies, from 1986 to 1992, Mr. Torok served as President
and Chief Executive Officer of Lone Pine Capital, a venture capital company
specialized in acquisitions management. Prior to joining Lone Pine Capital,
from 1981 to 1985, Mr. Torok served as President and Chief Executive Officer of
Merrill Lynch Realty, Inc. Under Mr. Toroks management, Merrill Lynch Realty,
Inc. grew from 100 offices to over 380 offices in 38 cities in the United
States and 4 foreign cities, becoming the worlds largest real estate brokerage
firm. Prior to joining Merrill Lynch Realty, Inc., Mr. Torok served in various
positions, including President of the Container and Core Division of Clevepak
Corporation, a former NYSE listed company, President of Associated Forest
Products, Inc., Vice President of Finance of Wausau Paper Mills, a Nasdaq
quoted company and Controller of the Forest Products Division and the Land
Development Division of Owens Illinois, Inc., a Fortune 100 company. Mr. Torok
received his M.B.A. from Dartmouth in 1962 and attended law school at Temple
University.

William Szilagyi has served as a member of our board of directors since
1988. From our inception in 1988 until 1990 he was our Executive Vice
President, and in 1991 he became our President and Chief Operating
Officer. During this period, Mr. Szilagyi served in various
positions with our subsidiary companies, including First National
Realty Associates of Georgia, Inc. and Hamer Holding Group, Inc. In 1992, together with
these subsidiaries, we filed voluntary petitions to reorganize
under Chapter 11 of the Bankruptcy Code. All petitions were voluntarily
converted to Chapter 7 liquidations and the companies assets were liquidated
and distributed in 1994. Mr. Szilagyi currently serves as the Vice President
of Operations of Amortibanc Management since 1996 and senior vice president of
Great Western since its inception. Since 1998, Mr. Szilagyi has also served as
the President of UniLoan, a mortgage brokerage company specializing in the
needs of new homebuilders and since 1998 as Vice President and Director of
Firebird Financial, L.L.C., a mortgage investment company. Prior to joining the
Amortibanc group of companies, Mr. Szilagyi served as President of Merrill
Lynch Realty, Inc. / Beach Cities

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Company in California. During his tenure with the Merrill Lynch Realty,
Inc., Mr. Szilagyi developed a Real Estate Owned Division to address the needs
of bank owned properties, turned around multiple unprofitable subsidiaries and
created a Resorts Division that managed and marketed resort properties
throughout the West. In addition, while with the Merrill Lynch, Mr. Szilagyi
created a multilingual international real estate network that targeted
properties in Central and South America, Mexico, Canada and the Pacific Rim.
Mr. Szilagyi, also served as Marketing Director with Merrill Lynch Realty
Associates, Inc. where he wrote the companys Policy and Procedure Manual and
New Sales Associate Training and Marketing Manual. Prior to that, Mr. Szilagyi
was employed by the Forest E. Olsen Company, a Coldwell Banker company, where
he supervised 18 real estate offices in the greater Los Angeles metropolitan
area. Mr. Szilagyi received his degree in business from California State
University in 1967. Mr. Szilagyi has written two books and given numerous
seminars on the advantages of real property ownership and investment.

Roger B. Clark has served as a member our board of directors since
1990. Mr. Clark has
been president and chief executive officer of GlennCon, Inc. a leading supplier
of goods and services to the worldwide public gaming industry since 1984. From
1970 to 1983, Mr. Clark served in several positions with Glendinning Companies,
including president of Glendinning Companies, North America from 1978-83,
during which time he was responsible for all U.S. operations, including the
consulting, retail promotion, telecom and lottery divisions. Prior to that,
Mr. Clark was employed by Procter & Gamble. Mr. Clark received his degree in
economics from Amherst College in 1955.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and executive officers, and persons who own more than 10% of a
registered class of our equity securities to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of equity securities of the Company. Officers, directors, and
greater than 10% stockholders are required to furnish us with copies of all
Section 16(a) forms they file. We have not received any copies of such forms
during the year ended August 31, 2001. Based solely on a review of our
transfer books, we believe that each person who, at any time during such fiscal
year, was a director, officer or beneficial owner of more than 10% of our
common stock complies with all Section 16(a) filing requirements during such
fiscal year, except that William Szilagyi received 100,000 shares of common
stock in November 1999 for services rendered to us and each of Jay N. Torok,
William Szilagyi and Roger B. Clark received vested stock warrants in November
1999 to purchase 250,000 shares of common stock.




Item 10.      Executive Compensation

We have not paid any compensation to any officer or director during the
past three years, however we have granted stock options and restricted stock to
our officers and directors during the past three years. In November 1999, we
granted 100,000 shares of restricted stock with an estimated value of
$1,000 to our president, William Szilagyi,
for services rendered to the Company. Also in November 1999, we granted stock
options with an exercise price of $0.10 per share to the following officers and
directors:

|                 |  |              |         |              |  |          |       |            |  |            |      |                      |  |     |           |  |  |  |           |  |  |   |   |  |  |   |   | 
|---------------- |  | ------------ | ------- | ------------ |  | -------- | ----- | ---------- |  | ---------- | ---- | -------------------- |  | --- | --------- |  |  |  | --------- |  |  | - | - |  |  | - | - | 
|                 |  |              |         |              |  |          |       |            |  |            |      |                     
|                 |  |              |         |              |  |          |       |            |  |            |      | Potential Realizable
|                 |  |              |         |              |  |          |       |            |  |            |      | Value at Assumed    
|                 |  | Number of    |         | Percent of   |  |          |       |            |  |            |      | Annual Rate of      
|                 |  | Shares of    |         | Total        |  |          |       |            |  |            |      | Stock Price         
|                 |  | Common Stock |         | Options      |  |          |       |            |  |            |      | Appreciation for the
|                 |  | Underlying   |         | Granted to   |  |          |       |            |  |            |      | Option Term         
|                 |  | Options      |         | Employees in |  | Exercise |       |            |  | Expiration |      |                     
|Name             |  | Granted      |         | Fiscal Year  |  | Price    |       | Grant Date |  | Date       |      | 5%                   |  | 10%
|                 |  |              |         |              |  |          |       |            |  |            |      |                      |  |    
|Jay N. Torok     |  |              | 250,000 |              |  |          | 33.3% |            |  | $          | 0.10 |                      |  |     | 11/2/1999 |  |  |  | 11/2/2009 |  |  | $ |  |  |  | $ |  | 
|William Szilagyi |  |              | 250,000 |              |  |          | 33.3% |            |  | $          | 0.10 |                      |  |     | 11/2/1999 |  |  |  | 11/2/2009 |  |  | $ |  |  |  | $ |  | 
|Roger B. Clark   |  |              | 250,000 |              |  |          | 33.3% |            |  | $          | 0.10 |                      |  |     | 11/2/1999 |  |  |  | 11/2/2009 |  |  | $ |  |  |  | $ |  | 

These
options were granted under our stock option plan and were fully
vested and exercisable on the date of grant. None of our officers or
directors exercised options to purchase our common stock during the
past three years.

We currently have no retirement, pension, profit sharing, or insurance or
medical reimbursement plans covering our officers or directors.

We have not made or contemplated making any advances to any of our
officers or directors.

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Item 11.      Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information as of August 31, 2001
concerning ownership of our common stock by each director and officer, by all
persons who hold of record or are known by us to hold beneficially of record 5%
or more of our outstanding shares and by all directors and officers as a group.
On June 15, 2002 there were 17,518,525 shares of our common stock
outstanding.

|                                                            |                                               |           |              |             |            |  |      |      |  
|----------------------------------------------------------- | --------------------------------------------- | --------- | ------------ | ----------- | ---------- |  | ---- | ---- | -
|                                                            |                                               |           | Shares       |             | Percent of
|                                                            |                                               |           | Beneficially |             | Shares    
|Name and Address of Beneficial Owner                        |                                               | Owned (1) |              | Outstanding
|                                                            |                                               |           |              |            
|Five Percent Shareholders:                                  |                                               |           |              |             |            |  |      |     
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | David Theroux (2)                             |           |              | 2,033,424   |            |  |      | 11.6 | %
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Great Western Land and Recreation, Inc.(3)(6) |           |              | 2,500,000   |            |  |      | 14.3 | %
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Willard W. Garvey Revocable Trust(3)(6)       |           |              | 2,500,000   |            |  |      | 14.3 | %
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Willard W. Garvey Trust Number Thirteen(3)(6) |           |              | 2,500,000   |            |  |      | 14.3 | %
|                                                           
|                                                           
|                                                           
|                                                           
|Directors and Executive Officers:                           |                                               |           |              |             |            |  |      |     
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Jay. N Torok(4)(7)                            |           |              | 1,839,336   |            |  |      | 10.4 | %
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | William Szilagyi(4)(8)                        |           |              | 1,346,521   |            |  |      | 7.6  | %
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Roger B. Clark(5)(9)                          |           |              | 765,810     |            |  |      | 4.3  | %
|                                                           
|                                                           
|                                                           
|                                                           
|All Directors and Executive Officers as a Group (3 persons) |                                               |           | 3,951,667    |             |            |  | 21.6 | %   



---

|(1) |  | In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a
person is deemed to be the beneficial owner, for purposes of this table, of any
shares of common stock if such person has or shares voting power or investment
power with respect to such security, or has the right to acquire beneficial
ownership at any time within 60 days after June 15, 2002. In calculating the
percentage of ownership, such shares are deemed to be outstanding for the
purpose of computing the percentage of shares of common stock owned by such
stockholder, but are not deemed outstanding for the purpose of computing the
percentage of shares of common stock owned by any other stockholder. For
purposes of this table, voting power is the power to vote or direct the
voting of shares and investment power is the power to dispose or direct the
disposition of shares.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | The address for David Theroux is 300 West Douglas, Suite 422, Wichita, KS
67202.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|   
|   
|   
|(3) |  | The address for Great Western Land and Recreation, Inc., the Willard W.
Garvey Revocable Trust and the Willard W. Garvey Trust Number Thirteen is 5115
N. Scottsdale Road, Suite 101, Scottsdale, AZ 85250. Amortibanc Investments,
L.C. beneficially owns 100% of the outstanding shares of Great Western Land and
Recreation. Amortibanc Investments disclaims beneficial ownership of these
shares. The Willard W. Garvey Revocable Trust and the Willard W. Garvey Trust
Number Thirteen are the only members of Amortibanc Investments and thereby
share beneficial ownership of these shares.                                                                                                                                                                                                                                                                                          
|   
|   
|   
|   
|(4) |  | The address for Messrs. Torok and Szilagyi is 5115 North Scottsdale Road,
Suite 101, Scottsdale, AZ 85250.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|   
|   
|   
|(5) |  | The address for Mr. Clark is 6 Cardinal Road, Hilton Head, SC 29926.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|   
|   
|   
|(6) |  | Includes 2,500,000 shares owned by Amortibanc Investments, LC of which the
Willard W. Garvey Revocable Trust and the Willard W. Garvey Trust Number
Thirteen are the only members and, thereby, share beneficial ownership of these
shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

9



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##### Table of Contents



|(7) |  | Includes 1,328,556 shares of common stock owned by Mr. Torok, 81,320 shares
owned by Lone Pine Industries, Inc., a company controlled by Mr. Torok, 179,460
shares owned by Western Reserve Environmental Services, a company in which Mr.
Torok has an interest, primarily in a joint trust with Anne V. Hodgkins, Mr.
Toroks wife, and 250,000 shares of common stock issuable upon the exercise of
vested stock options.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(8) |  | Includes 1,096,521 shares of common stock owned by Mr. Szilagyi and 250,000
shares of common stock issuable upon the exercise of vested stock options.                                                                                                                                                                                                                                                                      
|   
|   
|   
|   
|(9) |  | Includes 500,000 shares of common stock owned by Mr. Clark, 15,810 shares
owned by Clark-Bemis Lumber Company, a company controlled by Mr. Clark, and
250,000 shares of common stock issuable upon the exercise of vested stock
options.                                                                                                                                                                                    




Item 12.      Certain Relationships and Related Transactions

On
September 22, 2000, we purchased a $20,000 note receivable, issued by
an unrelated company in connection with a sale of real estate, bearing interest
at 9%. This note receivable was purchased from Great Western in exchange for
500,000 shares of our common stock. On December 29, 2000, we purchased
ownership interests in nine entities from Great Western in exchange for a
$951,629 note payable and 1,000,000 shares of our common stock. The most
significant of these interests were a 25.52% ownership in Laguna which owns an
apartment complex in Phoenix, Arizona, and a 51% interest in Firebird Financial
an entity that was formed to provide second mortgage financing in the Houston,
Texas area. Firebird Financial has not funded any new loans since 1998, and
does not have any current plans to fund additional loans in the future. In
addition, Great Western charges us $900 per month for management services it
provides to Firebird Financial. Furthermore, Great Western advances us funds to
pay our current expenses. At August 31, 2001, advances from Great Western
totaled $1,051,688, primarily to finance the purchase of the Companys
ownership interests in Laguna and Firebird Financial from Great Western. We
have also pledged our interest in Laguna as collateral for of a $500,000 loan
Great Western received from a third party (see Item 3. Legal Proceedings and
Item 13. Notes to Consolidated Financial Statements, Note J).

Jay Torok, the Chairman of our board of directors, is also the Chairman,
President and Chief Executive Officer of Great Western. William Szilagyi, our
president and a member of our board of directors is also the Senior Vice
President of Great Western.

We utilize office space at the office of Great Western. We are using this
space free of charge.




Item 13.      Exhibits and Reports on Form 8-K.

(a)  The following documents are filed as part of this Annual Report on
Form 10-KSB:



| |                                      
| | -------------------------------------
| | (1) Consolidated Financial Statements

| |  |                                                                                                        |  |         
| |  | ------------------------------------------------------------------------------------------------------ |  | --------
| |  |                                                                                                        |  | Page No.
| |  | Report of Independent Certified Public Accountants                                                     |  | F-2     
|
|
|
|
| |  |                                                                                                        |  |         
|
|
|
|
| |  | Consolidated Balance Sheet as of August 31, 2001                                                       |  | F-3     
|
|
|
|
| |  |                                                                                                        |  |         
|
|
|
|
| |  | Consolidated Statements of Operations for the years
ended August 31, 2001 and 2000                     |  | F-4     
|
|
|
|
| |  |                                                                                                        |  |         
|
|
|
|
| |  | Consolidated Statements of Stockholders Equity (Deficit)
for the years ended August 31, 2001 and 2000 |  | F-5     
|
|
|
|
| |  |                                                                                                        |  |         
|
|
|
|
| |  | Consolidated Statements of Cash Flows for the
years ended August 31, 2001 and 2000                     |  | F-6     

10



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##### Table of Contents



| |  |                                            |  |    
| |  | ------------------------------------------ |  | ---
|
|
|
|
| |  | Notes to Consolidated Financial Statements |  | F-7



| |             
| | ------------
| | (2) Exhibits

|                                                                                                                                                                                                                               
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Exhibits which are filed with this Annual Report or which
are incorporated herein by reference are set forth in the
Exhibit Index which appears on page E-1 hereof, which Exhibit
Index is incorporated herein by reference

(b)  No reports on Form 8-K were filed during fiscal 2001.

11



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##### Table of Contents






SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

|                    |  |                                          
|------------------- |  | -----------------------------------------
|                    |  | 1ST REALTY INVESTMENTS, INC.
(Registrant)
|                   
|                   
|                   
|                   
|Date: June 24, 2002 |  | By /s/ Jay N. Torok                      
|                   
|                   
|                   
|                   
|                    |  |                                          
|                   
|                   
|                   
|                   
|                    |  | Jay N. Torok
Chairman of the Board       

In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

|                     |  |                                                                                    |  |              
|-------------------- |  | ---------------------------------------------------------------------------------- |  | -------------
|Signatures           |  | Title                                                                              |  | Date         
|                     |  |                                                                                    |  |              
|                    
|                    
|                    
|                    
|/s/ Jay N. Torok     |  | Chairman of the Board
(Principal Executive Officer;                                |  | June 24, 2002
|                    
|                    
|                    
|                    
|                     |  |                                                                                    |  |              
|                    
|                    
|                    
|                    
|Jay N. Torok         |  |                                                                                    |  |              
|                    
|                    
|                    
|                    
|                     |  |                                                                                    |  |              
|                    
|                    
|                    
|                    
|/s/ William Szilagyi |  | President and Director
(Principal Financial Officer; Principal Accounting Officer) |  | June 24, 2002
|                    
|                    
|                    
|                    
|                     |  |                                                                                    |  |              
|                    
|                    
|                    
|                    
|William Szilagyi     |  |                                                                                    |  |              
|                    
|                    
|                    
|                    
|                     |  |                                                                                    |  |              
|                    
|                    
|                    
|                    
|/s/ Roger B. Clark   |  | Director                                                                           |  | June 24, 2002
|                    
|                    
|                    
|                    
|                     |  |                                                                                    |  |              
|                    
|                    
|                    
|                    
|Roger B. Clark       |  |                                                                                    |  |              

12



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##### Table of Contents



1ST REALTY INVESTMENTS, INC.




CONTENTS

|                                                                                                                |  |     
|--------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                |  | PAGE
|                                                                                                                |  |     
|- Report of Independent Certified Public Accountants                                                            |  | F-2 
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                                |  |     
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                               
|- Consolidated Balance Sheet, August 31, 2001                                                                   |  | F-3 
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                                |  |     
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                               
|- Consolidated Statements of Operations, for the fiscal
years ended August 31, 2001 and 2000                    |  | F-4 
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                                |  |     
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                               
|- Consolidated Statements of Stockholders Equity (Deficit)
for the fiscal years ended August 31, 2001 and 2000 |  | F-5 
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                                |  |     
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                               
|- Consolidated Statements of Cash Flows, for the fiscal years
ended August 31, 2001 and 2000                    |  | F-6 
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                                |  |     
|                                                                                                               
|                                                                                                               
|                                                                                                               
|                                                                                                               
|- Notes to Consolidated Financial Statements                                                                    |  | F-7 

F-1



---



##### Table of Contents






REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors

1st Realty Investments

We have audited the accompanying consolidated balance sheet of 1st Realty
Investments, Inc. as of August 31, 2001, and the related consolidated statements
of operations, stockholders equity (deficit) and cash flows for each of the two years in
the period ended August 31, 2001. These financial statements are the
responsibility of the Companys management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of 1st Realty
Investments as of August 31, 2001 and the consolidated results of its
operations and its consolidated cash flows for each of the two years in the
period ended August 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.

GRANT THORNTON LLP

Fountain Hills, Arizona
April 16, 2002

F-2



---



##### Table of Contents






1ST REALTY INVESTMENTS, INC.
CONSOLIDATED BALANCE SHEET
August 31, 2001

|                                               |                                      |                                                                                        |                                      |         |           |           |  
|---------------------------------------------- | ------------------------------------ | -------------------------------------------------------------------------------------- | ------------------------------------ | ------- | --------- | --------- | -
|ASSETS                                         |                                      |                                                                                        |                                      |        
|                                              
|                                              
|                                              
|                                              
|                                               | Cash and cash equivalents            |                                                                                        | $                                    | 5,799   |          
|                                              
|                                              
|                                              
|                                              
|                                               | Notes receivable, net                |                                                                                        |                                      | 68,322  |          
|                                              
|                                              
|                                              
|                                              
|                                               | Property and equipment, net          |                                                                                        |                                      | 698     |          
|                                              
|                                              
|                                              
|                                              
|                                               | Investment in unconsolidated company |                                                                                        |                                      | 760,987 |          
|                                              
|                                              
|                                              
|                                              
|                                               | Other assets                         |                                                                                        |                                      | 14,436  |          
|                                               |                                      |                                                                                        |                                      |        
|                                               |                                      | $                                                                                      | 850,242                              |        
|                                               |                                      |                                                                                        |                                      |        
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |                                      |                                                                                        |                                      |        
|                                              
|                                              
|                                              
|                                              
|                                               | Liabilities                          |                                                                                        |                                      |         |          
|                                              
|                                              
|                                              
|                                              
|                                               |                                      | Payable to related entities                                                            |                                      | $       | 1,065,534 |          
|                                              
|                                              
|                                              
|                                              
|                                               |                                      | Accounts payable and other accrued liabilities                                         |                                      |         | 15,628    |          
|                                               |                                      |                                                                                        |                                      |        
|                                               |                                      |                                                                                        | Total liabilities                    |         |           | 1,081,162 |  
|                                              
|                                              
|                                              
|                                              
|                                               | Stockholders
equity (deficit)       |                                                                                        |                                      |         |          
|                                              
|                                              
|                                              
|                                              
|                                               |                                      | Common stock, $0.001 par value; 25,000,000 shares
authorized; 17,518,525 shares issued |                                      |         | 17,519    |          
|                                              
|                                              
|                                              
|                                              
|                                               |                                      | Additional paid-in capital                                                             |                                      |         | 45,401    |          
|                                              
|                                              
|                                              
|                                              
|                                               |                                      | Accumulated deficit                                                                    |                                      |         | (293,840  | )        
|                                              
|                                              
|                                              
|                                              
|                                               |                                      | Treasury stock, at cost, 651,972 shares                                                |                                      |         |          |          
|                                               |                                      |                                                                                        |                                      |        
|                                               |                                      |                                                                                        | Total stockholders equity (deficit) |         |           | (230,920  | )
|                                               |                                      |                                                                                        |                                      |        
|                                               |                                      | $                                                                                      | 850,242                              |        
|                                               |                                      |                                                                                        |                                      |        

The accompanying notes are an integral part of this consolidated financial statement.

F-3



---



##### Table of Contents






1ST REALTY INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                 |                                            |   |                              |            |      |   |        |            | 
|---------------------------------------------------------------- | ------------------------------------------ | - | ---------------------------- | ---------- | ---- | - | ------ | ---------- | 
|                                                                 |                                            |   | Fiscal year ended August 31,
|                                                                 |                                            |   |                             
|                                                                 |                                            |   | 2001                         |            | 2000
|                                                                 |                                            |   |                              |            |     
|Interest income                                                  |                                            | $ | 18,898                       |            |      | $ |       |           
|                                                                
|                                                                
|                                                                
|                                                                
|General and administrative expense                               |                                            |   | 126,848                      |            |      |   | 5,005  |           
|                                                                 |                                            |   |                              |            |      |   |        |           
|                                                                 | Operating
loss                             |   | (107,950                     | )          |      |   | (5,005 | )         
|                                                                
|                                                                
|                                                                
|                                                                
|Other expense                                                    |                                            |   |                              |            |      |   |        |           
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Interest expense                           |   |                              | (51,684    | )    |   |        |           | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Equity in losses of unconsolidated company |   |                              | (83,445    | )    |   |        |           | 
|                                                                 |                                            |   |                              |            |      |   |        |           
|                                                                 |                                            |   | (135,129                     | )          |      |   |       |           
|                                                                 |                                            |   |                              |            |      |   |        |           
|Net loss                                                         |                                            | $ | (243,079                     | )          |      | $ | (5,005 | )         
|                                                                 |                                            |   |                              |            |      |   |        |           
|Net loss per common and common equivalent share                  |                                            |   |                              |            |      |   |        |           
|                                                                 | Basic                                      |   | $                            | (0.01      | )    |   | $      |           | 
|                                                                 |                                            |   |                              |            |      |   |        |           
|                                                                 | Diluted                                    |   | $                            | (0.01      | )    |   | $      |           | 
|                                                                 |                                            |   |                              |            |      |   |        |           
|Weighted average common and common equivalent
shares outstanding
|                                                                 | Basic                                      |   |                              | 17,154,141 |      |   |        | 16,018,525 | 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Diluted                                    |   |                              | 17,154,141 |      |   |        | 16,018,525 | 

The accompanying notes are an integral part of these consolidated financial statements.

F-4



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##### Table of Contents






1ST REALTY INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
Fiscal years ended August 31, 2001 and 2000

|                           |                                               |  |            |              |  |            |        |             |  |          |        |        |  |       |          |          |   |   |   |   |  |   |          |          |   | 
|-------------------------- | --------------------------------------------- |  | ---------- | ------------ |  | ---------- | ------ | ----------- |  | -------- | ------ | ------ |  | ----- | -------- | -------- | - | - | - | - |  | - | -------- | -------- | - | 
|                           |                                               |  |            | Common stock |  | Additional |        |             |  |          |        |        |  |       |          |          |   |  
|                           |                                               |  |            |              |  | paid-in    |        | Accumulated |  | Treasury |        |        |  |      
|                           |                                               |  |            | Shares       |  | Amount     |        | capital     |  | deficit  |        | stock  |  | Total
|                           |                                               |  |            |              |  |            |        |             |  |          |        |        |  |      
|Balance, September 1, 1999 |                                               |  | 15,586,525 |              |  | $          | 15,587 |             |  | $        | 13,013 |        |  | $     | (45,756  | )        |   | $ |  |   |  | $ | (17,156  | )       
|                          
|                          
|                          
|                          
|                           | Issuance of shares in payment
of expenses     |  |            | 432,000      |  |            |        | 432         |  |          |        | 3,888  |  |       |          |         |   |   |   |  |  |   |          | 4,320    |  
|                          
|                          
|                          
|                          
|                           | Net loss                                      |  |            |             |  |            |        |            |  |          |        |       |  |       |          | (5,005   | ) |   |   |  |  |   |          | (5,005   | )
|                           |                                               |  |            |              |  |            |        |             |  |          |        |        |  |       |          |          |   |   |   |   |  |   |          |         
|Balance, August 31, 2000   |                                               |  | 16,018,525 |              |  |            | 16,019 |             |  |          | 16,901 |        |  |       | (50,761  | )        |   |   |  |   |  |   | (17,841  | )       
|                          
|                          
|                          
|                          
|                           | Issuance of shares to acquire
note receivable |  |            | 500,000      |  |            |        | 500         |  |          |        | 19,500 |  |       |          |         |   |   |   |  |  |   |          | 20,000   |  
|                          
|                          
|                          
|                          
|                           | Issuance of shares to acquire
businesses      |  |            | 1,000,000    |  |            |        | 1,000       |  |          |        | 9,000  |  |       |          |         |   |   |   |  |  |   |          | 10,000   |  
|                          
|                          
|                          
|                          
|                           | Net loss                                      |  |            |             |  |            |        |            |  |          |        |       |  |       |          | (243,079 | ) |   |   |  |  |   |          | (243,079 | )
|                           |                                               |  |            |              |  |            |        |             |  |          |        |        |  |       |          |          |   |   |   |   |  |   |          |         
|Balance, August 31, 2001   |                                               |  | 17,518,525 |              |  | $          | 17,519 |             |  | $        | 45,401 |        |  | $     | (293,840 | )        |   | $ |  |   |  | $ | (230,920 | )       
|                           |                                               |  |            |              |  |            |        |             |  |          |        |        |  |       |          |          |   |   |   |   |  |   |          |          |   | 

The accompanying notes are an integral part of these consolidated financial statements.

F-5



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##### Table of Contents






1ST REALTY INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                  |                                      |                                                                                                     |                                                 |                                           |          |                              |         |      |        |       |      |  
|------------------------------------------------- | ------------------------------------ | --------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ----------------------------------------- | -------- | ---------------------------- | ------- | ---- | ------ | ----- | ---- | -
|                                                  |                                      |                                                                                                     |                                                 |                                           |          | Fiscal year ended August 31,
|                                                  |                                      |                                                                                                     |                                                 |                                           |          |                             
|                                                  |                                      |                                                                                                     |                                                 |                                           |          | 2001                         |         | 2000
|                                                  |                                      |                                                                                                     |                                                 |                                           |          |                              |         |     
|                                                  | Cash flows from operating activities |                                                                                                     |                                                 |                                           |          |                              |         |      |       
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      | Net loss                                                                                            |                                                 | $                                         | (243,079 | )                            |         | $    | (5,005 | )    
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      | Adjustments to reconcile net loss to net
cash used in operating activities                          |                                                 |                                           |          |                              |         |      |        |      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      |                                                                                                     | Bad debt expense                                |                                           |          | 110,301                      |         |      |        |      |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      |                                                                                                     | Depreciation and amortization                   |                                           |          | 1,624                        |         |      |        |      |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      |                                                                                                     | Undistributed losses of unconsolidated company  |                                           |          | 83,445                       |         |      |        |      |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      |                                                                                                     | Accretion of interest income                    |                                           |          | (11,081                      | )       |      |        |      |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      |                                                                                                     | Issuance of common stock in payment of expenses |                                           |          |                             |         |      |        | 4,320 |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      | Change in assets and liabilities (net of businesses acquired):                                      |                                                 |                                           |          |                              |         |      |        |      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      |                                                                                                     | Other assets                                    |                                           |          | (1,587                       | )       |      |        |      |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      |                                                                                                     | Accounts payable and other accrued liabilities  |                                           |          | (17,452                      | )       |      |        |      |     
|                                                  |                                      |                                                                                                     |                                                 |                                           |          |                              |         |     
|                                                  |                                      |                                                                                                     |                                                 | Net cash used in operating activities     |          |                              | (77,829 | )    |        |       | (685 | )
|                                                 
|                                                 
|                                                 
|                                                 
|Cash flows from investing activities              |                                      |                                                                                                     |                                                 |                                           |          |                              |         |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      | Collection of notes receivable                                                                      |                                                 |                                           | 46,119   |                              |         |      |       |      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      | Distribution of capital from unconsolidated company                                                 |                                                 |                                           | 31,900   |                              |         |      |       |      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      | Cash acquired through purchase of investments in
businesses                                         |                                                 |                                           | 18,632   |                              |         |      |       |      
|                                                  |                                      |                                                                                                     |                                                 |                                           |          |                              |         |     
|                                                  |                                      |                                                                                                     |                                                 | Net cash provided by investing activities |          |                              | 96,651  |      |        |       |     |  
|                                                  |                                      |                                                                                                     |                                                 |                                           |          |                              |         |     
|                                                 
|                                                 
|                                                 
|                                                 
|Cash
flows from financing activities              |                                      |                                                                                                     |                                                 |                                           |          |                              |         |     
|                                                  |                                      | Increase (decrease) in advances from related parties                                                |                                                 |                                           | (13,023  | )                            |         |      | 685    |      
|                                                  |                                      |                                                                                                     |                                                 |                                           |          |                              |         |     
|                                                 
|                                                 
|                                                 
|                                                 
|Net increase in cash and cash equivalents         |                                      |                                                                                                     | 5,799                                           |                                           |          |                              |        |     
|                                                 
|                                                 
|                                                 
|                                                 
|Cash and cash equivalents at beginning of period  |                                      |                                                                                                     |                                                |                                           |          |                              |        |     
|                                                  |                                      |                                                                                                     |                                                 |                                           |          |                              |         |     
|Cash and cash equivalents at end of period        |                                      | $                                                                                                   | 5,799                                           |                                           |          | $                            |        |     
|                                                  |                                      |                                                                                                     |                                                 |                                           |          |                              |         |     
|Supplemental disclosure of cash flow information: |                                      |                                                                                                     |                                                 |                                           |          |                              |         |     
|                                                 
|                                                 
|                                                 
|                                                 
|Cash paid during the year for interest            |                                      | $                                                                                                   |                                                |                                           |          | $                            |        |     
|                                                 
|                                                 
|                                                 
|                                                 
|Noncash investing and financing activities        |                                      |                                                                                                     |                                                 |                                           |          |                              |        |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      | Issuance of common stock to acquire a note receivable                                               |                                                 | $                                         | 20,000   |                              |         | $    |       |      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      | Issuance of common stock and a note payable to a related
party to acquire investments in businesses |                                                 | $                                         | 961,629  |                              |         | $    |       |      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                      | Issuance of common stock in payment of expenses                                                     |                                                 | $                                         |         |                              |         | $    | 4,320  |      

The accompanying notes are an integral part of these consolidated financial statements.

F-6



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##### Table of Contents






1ST REALTY INVESTMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A  SUMMARY OF ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the
preparation of the accompanying consolidated financial statements follows.



| |                                     
| | ------------------------------------
| | 1.Basis of presentation and business



| |  | 1st Realty Investments
(formerly First National Realty Associates Nevada, Inc.)
(the Company) is an Arizona-based company that was formed in Georgia in
October 1988, and became a publicly-held company through a merger into
Emphatic Mergers, Inc. a publicly-held corporation on April 11, 1990. The
name of the corporation was changed from First National Realty Associates,
Inc. to 1st Realty Investments on July 13, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company was founded with the intended purpose of becoming primarily a
national residential real estate brokerage company, focusing on relatively
affluent markets in geographically diverse market areas. Between 1988 and
1991, the Company grew primarily through the acquisition of other real
estate brokerage companies in multiple states. However, principally due to
the downturn in the real estate industry in the early 1990s, the Company
was unable to generate profitable operations. On April 6, 1992, the Company
filed a voluntary petition in the United States Bankruptcy Court for the
District of Georgia to reorganize under Chapter 11 of the United States
Bankruptcy Code (the Bankruptcy Code). On January 21, 1993, the Companys
Chapter 11 case was voluntarily converted to a case under Chapter 7 of the
Bankruptcy Code. All of the Companys assets were subsequently liquidated
and the proceeds distributed, and the bankruptcy was dismissed on September
27, 1994. From that date through the end of fiscal 2000, the Company had no
operations. It did, however, incur approximately $51,000 in administrative
and legal expenses during that time. The Company paid for these costs
either by issuing common stock or through advances it received from Great
Western Land and Recreation, Inc. (Great Western),
formerly Amortibanc Management L.C.                                                                                                                                        
|
| |  | On September 22, 2000, the Company purchased a $20,000 note receivable
issued by an unrelated company in connection with a sale of real estate,
bearing interest at 9%. This note receivable was purchased from Great
Western in exchange for 500,000 shares of the Companys common stock. On
December 29, 2000, the Company purchased ownership interests in nine
entities from Great Western in exchange for a $951,629 note payable and
1,000,000 shares of the Companys common stock. The most significant of
these interests were a 25.52% ownership in Laguna at Arrowhead Apartments
L.L.C., (Laguna) which owns an apartment complex in Phoenix, Arizona, and
a 51% interest in Firebird Financial L.L.C, (Firebird Financial) an entity
that was formed to provide second mortgage financing in the Houston, Texas
area. Firebird Financial has not funded any new loans since 1998, and does
not have any current plans to fund additional loans in the future.
The acquisitions of the ownership interests in the nine entities
from Great Western are accounted for by the purchase method of
accounting. The 25.52% interest in Laguna is being accounted for on
the equity method since acquisition and the accounts of Firebird
Financial are consolidated in these financial statements. The excess
cost over the Companys interest in the net equity of Laguna is
included in the investments in unconsolidated company on
the balance sheet and is being amortized over the life of the Laguna
apartment complex.
|
| |  | Great Western is a related company that owns 14.3% of the Companys common
stock as of June 15, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | The accompanying consolidated financial statements include the accounts of
the Company and its wholly- and majority-owned subsidiaries. Investments in
companies that represent 20% to 50% of the ownership interest are accounted
for on the equity method. Investments in companies that represent less than
a 20% ownership interest are accounted for on the cost basis. All material
intercompany accounts and transactions have been eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



| |               
| | --------------
| | 2.Income taxes



| |  | Income taxes are accounted for using the asset and liability method. Under
this method, deferred income tax assets and liabilities are recognized for
the future tax consequences attributable to temporary differences between
the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred income tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in
the years in which these temporary differences
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-7



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##### Table of Contents



1ST REALTY INVESTMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED

NOTE A  SUMMARY OF ACCOUNTING POLICIES  Continued



| |                           
| | --------------------------
| | 2.Income taxes (continued)



| |  | are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. A valuation allowance is provided
for deferred tax assets that are not expected to be recovered from future
operations. At August 31, 2001, the Company has approximately $13,932,000
of tax loss carryforwards, which expire on various dates through 2021, to
offset future federal taxable income. No tax benefit has been recognized, as
use of the net operating loss is not assured.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                   
| | ------------------
| | 3.Use of estimates



| |  | In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is
responsible for making estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements, and reported amounts of
revenues and expenses during the reported period. Actual results could
differ from those estimates.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                   
| | ------------------
| | 4.Cash equivalents



| |  | For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                         
| | ------------------------
| | 5.Property and equipment



| |  | Property and equipment, consisting of office furniture and equipment, is
recorded at cost and is depreciated over useful lives of three to five years
using the straight-line method. Accumulated depreciation totaled $3,667 at
August 31, 2001. Expenditures for maintenance and repairs are charged to
operations in the year in which the expense is incurred.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                 
| | ----------------
| | 6.Loss per share



| |  | Basic loss per share is computed by dividing net loss by the weighted
average number of common shares outstanding during the period. Diluted loss
per share incorporates the incremental shares issuable upon the assumed
exercise of stock options. The number of incremental shares from the
assumed exercise of stock options is calculated by applying the treasury
stock method. For the fiscal years ending August 31, 2001 and
2000, the shares issuable upon the exercise of the stock options
which were not included in the calculation because they were
antidilutive were 750,000.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                            
| | ---------------------------
| | 7. Stock-based compensation



| |  | The Company measures compensation expense relating to employee stock awards
in accordance with Accounting Principles Board Opinion No. 25 Accounting
for Stock Issued to Employees (APB 25). The Company measures
compensation expense relating to non-employee stock awards in accordance
with Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation (SFAS 123).
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                    
| | -----------------------------------
| | 8. Recent accounting pronouncements



| |  | In October 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144 Accounting for the Impairment or
Disposal of Long-Lived Assets: (SFAS 144). SFAS 144 requires that all
long-lived assets (including discontinued operations) that are to be
disposed of by sale be measured at the lower of book value or fair value
less cost to sell. Additionally, SFAS 144 expands the scope of discontinued
operations to include all components of an entity with operations that can
be distinguished from the rest of the entity and will be eliminated from the
ongoing operations of the entity in a disposal transaction. SFAS 144 is
effective for the Company as of January
1, 2002. The Company does not expect the implementation of SFAS 144 to have
a material effect on its financial condition or results of operations.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-8



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##### Table of Contents



1ST REALTY INVESTMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED

NOTE B  NOTES RECEIVABLE

Notes receivable consist primarily of second mortgage loans made to
individuals, which are reported net of unamortized discount of $42,311 and an
allowance for doubtful accounts of $110,301 at August 31, 2001. The notes have
original maturities of 3 to 5 years and bear interest at effective rates of
19.0% to 33.6%. Principal and interest are payable monthly based on 15-year
amortization schedules with the remaining balances due at maturity.

Notes receivable also includes a $20,000 note issued by an unrelated company in
connection with a sale of real estate, bearing interest at 9%, principal and
interest payable as lots are sold and released, with any outstanding balance
due in September 2003. This note receivable was purchased from Great Western
in September 2000 in exchange for 500,000 shares of the Companys common stock.

Maturities for notes receivable as of August 31, 2001 follow:

|                       |  |   |         | 
|---------------------- |  | - | ------- | 
|Year ending August 31, |  |   |         | 
|2002                   |  | $ | 36,064  | 
|                      
|                      
|                      
|                      
|2003                   |  |   | 164,870 | 
|                      
|                      
|                      
|                      
|2004                   |  |   | 20,000  | 
|                       |  |   |         | 
|                       |  | $ | 220,934 | 
|                       |  |   |         | 

NOTE C  INVESTMENT IN UNCONSOLIDATED COMPANY

On December 29, 2000, the Company acquired a 25.52% ownership in Laguna at
Arrowhead Apartments L.L.C., (Laguna) which owns an apartment complex in
Phoenix, Arizona. This investment is accounted for using the equity method.
Under the equity method, the Companys investment balance approximates the
Companys original cost adjusted for its equity interest in the earnings and
losses of Laguna since December 29, 2000, the date of acquisition. At August
31, 2001, the Companys investment in Laguna totaled $760,987.

Lagunas fiscal year ends on December 31. Summarized financial information for
Laguna as of August 31, 2001 follows:

|                                           |                        |              |           |           |           | 
|------------------------------------------ | ---------------------- | ------------ | --------- | --------- | --------- | 
|As
of August 31, 2001                     
|                                          
|                                          
|                                          
|                                          
|                                           | Current assets         |              | $         | 245,920   |          
|                                          
|                                          
|                                          
|                                          
|                                           | Noncurrent assets      |              |           | 9,474,147 |          
|                                           |                        |              |           |          
|                                           |                        | Total assets |           | $         | 9,720,067 | 
|                                           |                        |              |           |          
|                                           | Current liabilities    |              | $         | 204,141   |          
|                                          
|                                          
|                                          
|                                          
|                                           | Noncurrent liabilities |              |           | 9,442,128 |          
|                                          
|                                          
|                                          
|                                          
|                                           | Members capital       |              |           | 73,798    |          
|                                           |                        |              |           |          
|                                           |                        | $            | 9,720,067 |          
|                                           |                        |              |           |          
|For
the eight months ended August 31, 2001
|                                          
|                                          
|                                          
|                                          
|                                           | Revenues               |              | $         | 1,009,707 |          
|                                          
|                                          
|                                          
|                                          
|                                           | Net loss               |              |           | (326,980  | )        

F-9



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##### Table of Contents



1ST REALTY INVESTMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED

NOTE D  PAYABLES TO RELATED ENTITIES

Related entity payables are as follows at August 31,2001:

|                         |  |   |           | 
|------------------------ |  | - | --------- | 
|Great Western (1)        |  | $ | 1,051,688 | 
|                        
|                        
|                        
|                        
|JPMH Ltd Partnership (2) |  |   | 13,846    | 
|                         |  |   |           | 
|                         |  | $ | 1,065,534 | 
|                         |  |   |           | 



|(1) |  | The advances from Great Western were made primarily to finance the
purchase of the Companys ownership interests in Laguna and Firebird
Financial from Great Western on December 29, 2000. These advances bear
interest at 8% per annum beginning in January 2001 and are payable on
demand.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | JPMH Ltd. Partnership holds a 49% ownership interest in Firebird
Financial.                                                                                                                                                                                                                 

NOTE E  FINANCIAL INSTRUMENTS

The carrying amounts reflected in the consolidated balance sheet for notes
receivable approximate fair value considering the quality of the credit,
payment terms and short remaining maturities. A reasonable estimate
of the fair value for payables to related entities cannot be made due
to the common control between the entities.

NOTE F  STOCK OPTIONS

The Company has adopted the 1999 Stock Option Plan (the Plan), an incentive
plan for key employees and directors. A total of 1,000,000 shares of the
Companys common stock have been reserved for issuance under the Plan. The
plan is administered by the Board of Directors or a committee thereof, which is
authorized to, among other things, select the key employees and directors who
will receive grants and determine the exercise prices and vesting scheduled of
the options. Options expire no more than ten years after the date of grant.
Upon termination of an option holders employment, all unvested options will
immediately terminate and vested options will generally remain exercisable for
a period of three months after date of termination (one year in case of
disability, three years in case of death).

As of August 31, 2001, there were 750,000 options outstanding under the Plan.
The options were granted in 1999 and are fully exercisable. These options have
a remaining contractual life of 8.2 years as of August 31, 2001, expire in 2009
and have an exercise price per share of $0.10. The pro forma
information required under SFAS 123 is not included as it has no
impact on loss per share.

NOTE G  TREASURY STOCK

Treasury stock consists of previously issued shares that were returned to the
Company during and shortly after the Companys bankruptcy
proceedings. These
shares were returned as part of litigation settlements at the time of
bankruptcy.

F-10



---



##### Table of Contents



1ST REALTY INVESTMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED

NOTE H  COMMITMENTS AND CONTINGENCIES

From time-to-time the Company is involved in litigation arising in the normal
course of business. The Company is not a party to any outstanding litigation
as of August 31, 2001 or as of the filing date of this report, other than as
discussed in Note J.

NOTE I  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Consolidated quarterly financial information for fiscal 2001 and 2000 is as
follows:

|                                                |  |             |        |             |  |             |          |           |  |   |         |   |  |   |         |  
|----------------------------------------------- |  | ----------- | ------ | ----------- |  | ----------- | -------- | --------- |  | - | ------- | - |  | - | ------- | -
|                                                |  |             |        |             |  | Fiscal 2001 |          |           |  |  
|                                                |  |             |        |             |  |             |          |           |  |  
|Quarter ended                                   |  | November 30 |        | February 28 |  | May 31      |          | August 31
|                                                |  |             |        |             |  |             |          |          
|Revenue                                         |  | $           | 340    |             |  | $           | 13,479   |           |  | $ | 2,479   |   |  | $ | 2,600   |  
|                                                |  |             |        |             |  |             |          |           |  |   |         |   |  |   |         |  
|Operating loss                                  |  | $           | (4,660 | )           |  | $           | (97,862  | )         |  | $ | (1,841  | ) |  | $ | (3,587  | )
|                                                |  |             |        |             |  |             |          |           |  |   |         |   |  |   |         |  
|Net loss                                        |  | $           | (4,660 | )           |  | $           | (128,537 | )         |  | $ | (53,081 | ) |  | $ | (56,801 | )
|                                                |  |             |        |             |  |             |          |           |  |   |         |   |  |   |         |  
|Net loss per common and common
equivalent share |  | $           |       |             |  | $           | (0.01    | )         |  | $ |        |   |  | $ |        |  
|                                                |  |             |        |             |  |             |          |           |  |   |         |   |  |   |         |  

|                                                |  |             |        |             |  |        |      |           |  |   |     |   |  |   |      |  
|----------------------------------------------- |  | ----------- | ------ | ----------- |  | ------ | ---- | --------- |  | - | --- | - |  | - | ---- | -
|                                                |  | Fiscal 2000 |        |             |  |        |      |           |  |  
|                                                |  |             |        |             |  |        |      |           |  |  
|Quarter ended                                   |  | November 30 |        | February 28 |  | May 31 |      | August 31
|                                                |  |             |        |             |  |        |      |          
|Revenue                                         |  | $           |       |             |  | $      |     |           |  | $ |    |   |  | $ |     |  
|                                                |  |             |        |             |  |        |      |           |  |   |     |   |  |   |      |  
|Operating loss                                  |  | $           | (3,857 | )           |  | $      | (100 | )         |  | $ | (83 | ) |  | $ | (965 | )
|                                                |  |             |        |             |  |        |      |           |  |   |     |   |  |   |      |  
|Net loss                                        |  | $           | (3,857 | )           |  | $      | (100 | )         |  | $ | (83 | ) |  | $ | (965 | )
|                                                |  |             |        |             |  |        |      |           |  |   |     |   |  |   |      |  
|Net loss per common and common
equivalent share |  | $           |       |             |  | $      |     |           |  | $ |    |   |  | $ |     |  
|                                                |  |             |        |             |  |        |      |           |  |   |     |   |  |   |      |  

NOTE J  SUBSEQUENT EVENTS

Great Western entered into a merger agreement with quepasa.com as of August 6,
2001. In October 2001, in order to induce Great Western to amend and extend
the original merger agreement, quepasa.com loaned Great Western $500,000 (the
loan). This loan was secured by 1st Realtys investment in Laguna. In
February 2002, the merger agreement was terminated. The merger agreement
provided for a termination fee of $500,000 as liquidated damages under certain
circumstances. Great Western believes that it is entitled to this termination
fee, which would result in the loan being deemed paid in full, and has filed a
declaratory judgment action against quepasa.com on that issue. quepasa.com has
filed a counterclaim, alleging that it is entitled to the termination fee and
seeking to foreclose on the loan. quepasa.com has named 1st Realty as a
third-party defendant to its counterclaim because 1st Realtys investment in
Laguna was pledged as collateral for the loan. Management does not believe
that the ultimate resolution of this matter will have a material adverse effect
on 1st Realtys financial condition, results of operations or cash flows.

F-11



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##### Table of Contents



1ST REALTY INVESTMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED

NOTE K  RELATED PARTY TRANSACTIONS

On September 29, 2000, the Company purchased a $20,000 note receivable, issued
by an unrelated company in connection with a sale of real estate, bearing
interest at 9%. This note receivable was purchased from Great Western in
exchange for 500,000 shares of the Companys common stock. On December 29,
2000, the Company purchased ownership interests in nine entities from Great
Western in exchange for a $951,629 note payable and 1,000,000 shares of the
Companys common stock. These interests included a 25.52% ownership in Laguna
at Arrowhead Apartments L.L.C. (Laguna), which owns an apartment complex in
Phoenix, Arizona, and a 51% interest in Firebird Financial L.L.C. (Firebird
Financial), an entity that was formed to provide second mortgage financing in
the Houston, Texas area. Firebird Financial has not funded any new loans since
1998, and does not have any current plans to fund additional loans in the
future. In addition, Great Western charges the Company $900 per month for
management services provided to Firebird Financial. At August 31, 2001,
advances from Great Western totaled $1,051,688, primarily to finance the
purchase of the Companys ownership interests in Laguna and Firebird Financial
from Great Western. The Company has pledged its interest in Laguna as
collateral for a $500,000 loan Great Western received from a third party (see
Note J).

Jay Torok, the Chairman of the board of directors, is also the Chairman,
President and Chief Executive Officer of Great Western. William Szilagyi, a
member of the board of directors is also the Senior Vice President of Great
Western.

The Company utilizes office space at the office of Great Western. The Company
is using this space free of charge.

F-12



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##### Table of Contents






2001 10-KSB EXHIBIT INDEX

|        |  |                                                                                                                                                                                        
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                        
|No.     |  |                                                                                                                                                                                        
|3.1     |  | Articles of Incorporation of First National Realty Associates,
Inc. (Incorporated by reference to Exhibit 8 to Registration
Statement on Form S-18 (No. 33-30679-NY))                  
|       
|       
|       
|       
|        |  |                                                                                                                                                                                        
|       
|       
|       
|       
|3.2     |  | Agreement of Merger of First National Realty Associates, Inc.
into Emphatic Mergers (Incorporated by reference to Exhibit 14 to
Registration Statement on Form S-18 (No. 33-30679- NY))
|       
|       
|       
|       
|        |  |                                                                                                                                                                                        
|       
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|3.3     |  | By-Laws of First National Realty Associates, Inc. (Incorporated
by reference to Exhibit 9 to Registration Statement on Form S-18
(No. 33-30679-NY))                                    
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|10.1    |  | Promissory Note, dated September 22, 2000 from First Commerce
Marketing L.L.C. to 1st Realty Investments, Inc.                                                                         
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|10.2    |  | Promissory Note, dated December 31, 2000, from 1st Realty
Investments, Inc to Amortibanc Management L.C.                                                                               
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|10.3    |  | Assignment of Membership Interest of Laguna Investments L.L.C.,
dated December 29, 2000, from Amortibanc Management L.C. to 1st
Realty Investments, Inc.                               
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|10.4    |  | Assignment of Membership Interest of Firebird Financial L.L.C.,
dated December 29, 2000, from Amortibanc Management L.C. to 1st
Realty Investments, Inc.                               
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|10.5    |  | Assignment of Membership Interest of Arizona Legacy Ranches
L.L.C., dated December 29, 2000, from Amortibanc Management L.C.
to 1st Realty Investments, Inc.                           
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|10.6    |  | Assignment of Membership Interest of F Troops L.L.C., dated
December 29, 2000, from Amortibanc Management L.C. to 1st Realty
Investments, Inc.                                         
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|10.7    |  | Assignment of Membership Interest of Bosque del San Antonio
L.L.C., dated December 29, 2000, from Amortibanc Management L.C.
to 1st Realty Investments, Inc.                           
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|10.8    |  | Assignment of Membership Interest of Aquarius Mountain Water &
Mineral L.L.C., dated December 29, 2000, from Amortibanc
Management L.C. to 1st Realty Investments, Inc.                
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|10.9    |  | Assignment of Membership Interest of Prom Partners L.P., dated
December 29, 2000, from Amortibanc Management L.C. to 1st Realty
Investments, Inc.                                      
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|10.10   |  | Assignment of Membership Interest of Willow Springs Water L.L.C.,
dated December 29, 2000, from Amortibanc Management L.C. to 1st
Realty Investments, Inc.                             
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|10.11   |  | Assignment of Membership Interest of Houston Damage Control
L.L.C., dated December 29, 2000, from Amortibanc Management L.C.
to 1st Realty Investments, Inc.                           
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|21      |  | List of Subsidiaries                                                                                                                                                                   
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|99.1    |  | Risk Factors                                                                                                                                                                           

E-1